What are some warning signs of mortgage modification scams and foreclosure rescue scams?
Any of the following could be a sign of a scam (but there may be others):
- "Pay us $1,000 and we'll save your home." Some legitimate housing counselors may charge small fees, but fees that amount to thousands of dollars are likely a sign of potential fraud. Mortgage assistance relief service providers cannot collect fees until you have a written, acceptable offer from your lender or servicer and a written description of the key changes to your mortgage.
- "I guarantee I will save your home—trust me." Beware of guarantees that a person or mortgage assistance relief service providers can stop foreclosure and allow you to remain in your house. Unrealistic promises are a sign that the person making them likely will not consider your particular circumstances and is unlikely to provide services that will actually help you. Look for providers that give you realistic evidence for any claims they make.
- "Sign over your home and we'll let you stay in it." Beware of anyone offering to make mortgage payments for you and rent your home back to you in exchange for the title to your home. Signing over the deed to a person gives that person the power to evict you, to raise your rent, or to sell your house. Although you will no longer own your home, you still will be legally responsible for paying the mortgage.
- "Stop paying your mortgage." Do not trust anyone who tells you to stop making payments to your lender or servicer, even if the person promises to make payments for you. If a mortgage assistance relief service provider tells you this, it must also tell you that you may lose your home and damage your credit rating.
- "If your lender calls, don't talk to him or her." Mortgage assistance relief service providers are legally barred from telling you to stop communicating with your lender or servicer. Advice like this is a good sign of a scam.
- "Your lender never had the legal authority to make a loan." Beware of anyone who claims that "secret laws" can erase your debt and have your mortgage contract declared invalid. A mortgage assistance relief service provider may not misrepresent the terms of your loan or the obligations to make payments under the loan. It is illegal for someone to claim that you are not obligated to pay your mortgage.
- "Just sign this now; we'll fill in the blanks later." Take the time to read and understand anything you sign. Never let anyone else fill out paperwork for you. Don't let anyone pressure you into signing anything that you don't agree with or understand. Never sign documents with blank spaces that can be filled in later.
- "Call 1-800-Fed-Loan." Beware of providers that imitate official federal programs. Providers of mortgage assistance relief services must tell you in their communications with you that they are not affiliated with the government. Keep in mind that assistance from a Department of Housing and Urban Development (HUD)-approved housing counselor is free and available by calling (800) 569-4287 or searching online for a housing counseling agency. You can always work directly with your lender or mortgage servicer.
- "File for bankruptcy and you can keep your home." Filing for bankruptcy stops foreclosure only temporarily. If you do not make your mortgage payments, the bankruptcy court may eventually allow your lender to foreclose.
- "Why haven't you replied to our offer? Do you want to live on the streets?" High-pressure tactics signal trouble. A mortgage assistance relief service provider is legally obligated to say “You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender (or servicer). If you reject the offer, you do not have to pay us.” If someone pressures you to work with him or her to stop foreclosure, that person may be violating the law. Legitimate housing counselors do not conduct business that way.
Last Reviewed: October 2020
Please note: The terms "bank" and "banks" used in these answers generally refer to national banks, federal savings associations, and federal branches or agencies of foreign banking organizations that are regulated by the Office of the Comptroller of the Currency (OCC). Find out if the OCC regulates your bank. Information provided on HelpWithMyBank.gov should not be construed as legal advice or a legal opinion of the OCC.